Local shares defy geopolitical tensions to edge higher
The Australian share market pared back earlier losses to move higher by midday, despite rising oil prices and renewed threats to destroy Iran’s energy infrastructure.
The S&P/ASX200 was up 26.7 points (0.32 per cent) at 8487.7 points at midday AEST on Tuesday, while the broader All Ordinaries was up 25.1 points (0.29 per cent) at 8682.6 points.
Conflicting messages from the White House have investors cautious in overseas markets; While US President Donald Trump has expressed his desire to negotiate with Iran, he has also revived warnings that power plants and Kharg Island could become targets if the Strait of Hormuz remains closed.
In his public statements, US Federal Reserve Chairman Jerome Powell confirmed his wait-and-see approach regarding high oil prices and signaled the temporary impact of energy supply shocks on the economy and inflation.
Investors in Australia are digesting the minutes of the latest cash rate decision, where a 0.25 percentage point increase was deemed necessary by a narrow majority of board members due to inflationary pressures.
The Reserve Bank of Australia has also banned credit and debit card surcharges, despite concerns raised by banks and small firms.
The Fair Work Commission’s decision to abolish junior pay rates is also expected to increase the running costs of retail and fast food businesses.
Moomoo market strategist Michael McCarthy said resource names with oil exposure could provide some insulation for the local market.
“But until there is meaningful progress on Iran’s situation, the path of least resistance for broader markets will continue to be lower,” he said.
At lunch seven of the ASX-200’s 11 sectors were up, led by a 1.7 per cent rise in technology stocks.
Brent crude remains mostly above US$100 per barrel as energy companies continue to trade higher amid rising prices and geopolitical uncertainty.
Mining stocks fell 0.2 percent as the outlook for Chinese iron ore and coal demand cooled.
Financials were higher despite tightened surcharge regulation; CBA was up 0.4 per cent to $169.45, NAB was down 0.3 per cent to $41.13, Westpac was up 0.9 per cent to $39.44 and ANZ was flat at $35.89.
The Australian dollar is buying 68.57 US cents, down slightly from 68.69 US cents at 5pm on Monday.
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